CITGO Asphalt Refining Co. v. Frescati Shipping Co. (18-565)

argument 18-565

CITGO Asphalt Refining Co. v. Frescati Shipping Co.

Supreme Court of the United States 56 min 6 speakers 8 chapters transcribed 7 days ago official recording ↗

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What is the basic issue and the safe‑port clause being argued in CITGO Asphalt Refining v. Frescati?

John G. Roberts 0:00

We'll hear argument first this morning in case eighteen five sixty five Sitco Asphalt Refining Company versus Frescati Shipping Company. Mr Phillips.

William E. E. Phillips 0:10

Thank you, Mr Chief Justice, and may it please the Court. The basic issue in this case is what ought to be the default rule for what is the generally referred to as uh safe port or safe berth clause in the uh standard charter. party form that has uh frankly uh governed the sh transportation of uh ocean going vessels for a very, very long time. Um there are the court below concluded that uh based on the language uh referring specifically to staying afloat and safely. uh that this imposed a strict liability on the charterer, uh my client, who designated uh that Paulsboro, New Jersey would be the uh port of entry for these particular goods. Uh that is an extraordinary interpretation under the circumstances in which my client is now facing well in excess of one hundred and forty million dollars in

William E. E. Phillips 1:06

uh and and an award uh based uh solely on an accident that was candidly unknown and unknowable uh at the time that the designation was made and candidly at any time until uh the actual elision occurred. The question then is, is there a different or better or more sensible default rule that the Court might turn to? And it seems worth spending a second in just focusing on the exact language of this clause, which is it the appendix to the petitioner's brief at eight A. The vessel shall discharge at any safe place or wharf that of course says nothing about any obligations of any of the parties, which shall be designated and procured by the charterer, so that is the obligation of my client to designate and and procure the space.

William E. E. Phillips 1:51

Provided that the vessel can proceed there to lie at and depart there from always safely afloat. Any lighterage being at the expense, risk and peril of the charterer. It seems to me the difficulty with saying that this is an unlimited source of liability on a strict liability theory is that why would you identify lighterage as the specific remedy to be worried about unless what you're really concerned about is has the charterer made essentially a safe choice As far as everyone can tell. And then when the captain gets there, if for whatever reason the captain in his or her judgment decides it's not a safe choice, and decides to go off into another port or to offload some portion, that the expense and the risk, all of that is then imposed upon the charterer.

William E. E. Phillips 2:41

Mm-hmm.

Unknown 2:44

the rule for some time in the seventh circu in the second circuit. including an opinion by Henry. friendly. And isn't this something that the parties can adjust to if you know what the rule is? They can adjust to it and ensure Accordingly.

William E. E. Phillips 3:05

Uh that's that is precisely what the court said about Norfolk Southern versus James Kirby in terms of how do you interpret the contract. Obviously it will always be possible. to write around whatever the contract interpretation has to be. But the court still has the fundamental obligation to determine what should be the default rule. And while it is true that there was that there's certainly been a period of time when the Second Circuit adopted a a broader construction uh of this clause. It is equally true that for almost thirty years The Fifth Circuit has adopted precisely the opposite construction of this clause and uh Gilmore and Black

Unknown 3:51

Treatises. But There is another clause that is adopted in some charter parties and it's called what is it called? Uh the due diligence clause. So if that clause, that clause would be um unnecessary under your reading, because you say that's all that the Safe Birth Clause required. So all of these charters that have been adopting a specific language of due diligence. They're doing they've done something that's Entirely unnecessary.

William E. E. Phillips 4:28

The the difficulty I think with looking at other forms and other clauses and other contracts between other parties is is candidly there's no evidence that ties any knowledge of any of that to the decision that was made between the Star Tanker and my client when they entered into the into the Charter Party arrangement in this particular case.